EUR/USD Is Expected To Fall Below 1.0950 As The Market Is Optimistic About US Economic Prospects

During the Asian session, the EUR/USD pair is anticipated to plunge sharply below the near-term support level of 1.0950. The main currency pair is attracting bids as the US Dollar Index (DXY) has displayed a recovery move and surpassed the 102.00 resistance level.

In the Asian session, S&P500 futures have extended their losses in anticipation that the Federal Reserve's (Fed) decision to raise interest rates could undermine revenue guidance.

The Federal Reserve's (Fed) Beige Book minutes indicate that economic activity in the majority of districts is stable. However, loans and advances to businesses and consumers have decreased as a result of strict credit conditions imposed by commercial banks in the United States to avoid uncertainty in a volatile environment.

In the meantime, Fed policymakers remain optimistic about the economic outlook due to the constrained labor market. As reported by Reuters, James Bullard, president of the Federal Reserve Bank of St. Louis, advocated for the continuation of the central bank's policy tightening in light of the fact that labor market data remains robust. A Fed official added that the demand for labor has not yet weakened and that a robust labor market leads to robust consumption.

Due to the constrained US labor market, Citi Group anticipates a fourth-quarter recession in the US economy. Previously, it was predicted that the United States will enter a recession in the third quarter of 2023.

Investors are awaiting the release of the Consumer Confidence data in the Eurozone. Preliminary Consumer Confidence (April) data is anticipated to rise to -18.5 from -19.2 previously. This could be due to persistently falling Eurozone inflation, which reduces the burden on households.